1 / 9

ACT 4131 Management Accounting III

ACT 4131 Management Accounting III. Compensation. What is Compensation?. A systematic approach to provide recognition (monetary and non-monetary value) to employees in exchange for work performed Normally, it is related to performance or performance-based compensation. Purposes.

hope
Download Presentation

ACT 4131 Management Accounting III

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. ACT 4131 Management Accounting III Compensation

  2. What is Compensation? • A systematic approach to provide recognition (monetary and non-monetary value) to employees in exchange for work performed • Normally, it is related to performance or performance-based compensation

  3. Purposes • Recruit and retain qualified employees • Reward and encourage peak performance • Increase or maintain job satisfaction

  4. Purposes • Reduce turnover and encourage company loyalty • Behaviour congruence: reinforce desired behaviour, modify behaviour, induce learning

  5. Behavioural Aspects • Motivate employees through influencing behaviour so that they seek goal congruence Principal-Agent Theory: conflict of interest between principal and agent Motivation Theory such as Expectancy Theory

  6. Compensation Package • Salary • Benefits (Retirement, Medical) • Incentive Compensation

  7. Incentive Plan • Short-term: Bonus, deferred compensation, fixed-performance pay (pay only if performance is actually good) • Long-term: Stock Option – right to buy a number of shares of stock at or after a given date in the future (exercise date)

  8. Types of incentives • Financial Rewards: Salary increase, bonuses, benefits, perquisites • Pyschological & Social Rewards: Promotion possibilities, increased responsibility, better geographical location, increased autonomy, recognition

  9. Discussion Let’s discuss about possible issues in designing an effective performance-based incentive system. Assume you are empowered to make the relevant decisions.

More Related